Ordinary & Preference Shares Explained: Codes 3000 & 3010

When a limited company issues shares to raise capital, the type of share issued matters — ordinary and preference shares carry different rights, so Sage keeps them in separate codes.

The codes, and what each one holds

Code 3000 — Ordinary Shares records the nominal value of ordinary shares issued — the standard share class carrying voting rights and a claim to dividends, but ranking behind preference shares if the company is wound up.

Code 3010 — Preference Shares records preference shares, which typically carry a fixed dividend rate and rank ahead of ordinary shares for dividends and on winding up, but usually without voting rights. Both are Capital & Reserves codes and normally carry a credit balance, changing only when shares are issued or bought back.

A worked example

Say a company issues 1,000 ordinary shares at £1 nominal value each, and separately issues 500 preference shares at £1 nominal value each carrying a fixed 6% dividend.

Ordinary Shares (code 3000): £1,000 credited, matched by £1,000 received into the bank account.

Preference Shares (code 3010): £500 credited, matched by £500 received into the bank account.

Why this matters day to day

Keeping ordinary and preference share capital apart matters because they carry genuinely different rights and obligations — a preference dividend is typically expected to be paid before any ordinary dividend, regardless of how the company has performed that year. For most small companies these codes barely move once shares are first issued, but they're closely checked whenever new investment comes in or ownership changes.